Go slow on retail FDI: Sonia to PM

TNNFeb 6, 2007, 12.50am IST

NEW DELHI: In yet another significant policy intervention, Congress president Sonia Gandhi has asked Prime Minister Manmohan Singh to make any forward movement on opening up of the retail sector "only after examining the impact of the decision on livelihood security of those engaged in small-scale operations".

Ms Gandhi appears to share the views of those opposing the entry of foreign direct investment (FDI) in retail, particularly the Left. The argument and the tone of the letter to the PM—widely reported by a private television channel—suggests that she's in agreement with the by-now-familiar concerns raised by the Left.

"I have received suggestions from many quarters about the desirability to first study the possible impact of transnational supermarkets on livelihood security of those engaged in small-scale operations... I thought I would convey this to you so that you may consider having the relevant issues properly examined before further decisions are taken." When contacted, the PMO spokesman denied any knowledge of the existence of such a letter.

The prime minister has been maintaining that the government could "work out a package that is fair, that entry of foreign enterprises into the retail trade will not hurt our small shopkeepers, but will create lot more employment."

He had told a recent economic summit that FDI in retail was one of the ways to move India's economy to a higher growth path.

The Leftists have been agitating against the decision of Wal-Mart's plan to set up shop in India in collaboration with the Bharti group. The government had, however, rejected their arguments and said the entry was in conformity with FDI norms.

The government is of the view that the proposal, which intends to bring FDI in wholesale cash-and-carry trade, meets current regulations. Wal-Mart also has plans to enter into a franchisee agreement with the Bharti group for the retail business.

The government leadership has so far been successful in resisting the Left's pressure to reopen the Wal-Mart-Bharti deal. But with Ms Sonia Gandhi's intervention, the picture could change as the campaign would get the much-needed political muscle.

Recent months, it be recalled, had seen the government polices being tweaked by Ms Gandhi's suggestions on land acquisition for SEZs and on petroleum prices.

This is naturally a worrying development for the government leadership as the Left and other anti-FDI sections could project the latest missive from Ms Gandhi as a dissent against the government's policy paradigm.

This could also slow down the entire process as the government cannot take the next step without addressing Ms Gandhi's advise to "first study the impact of the decision on the livelihood security of small traders".